Deck 6: Bonds

Question 1

Two bonds have face value $1000,redeemable at par in n-years and both bought to yield j₂ = 8%.Bond 1 has coupon rate j₂ = 12.7% and sells for $1406.36.Bond 2 has coupon rate j₂ = 6.35% and sells for $P.What is the value of P?

A)Less than $850
B)$850 or more,but less than $900
C)$900 or more,but less than $950
D)$950 or more

Answer 1

$850 or more,but less than $900

Question 2

A $10,000 bond can be redeemed for $10,450 in 10 years.It pays 20 semi-annual coupons at j₂ = 7%.The book value adjustment for the 4^th coupon is $22.40 and the book value adjustment for the 5^th coupon is $23.24.What is the book value of the bond after 6 years (12 coupons)?

A)$10,341.74
B)$10,297.80
C)$10,165.13
D)$10,051.24

Answer 2

$10,165.13

Question 3

A $1000 bond with semi-annual coupons is redeemable for $960 in 6 years.The write-down (book value adjustment)in the first coupon period is $1.79.What is the price of the bond in order to yield j₂ = 10%?

A)$931.51
B)$971.51
C)$988.49
D)$1028.49

Answer 3

$988.49

Question 4

You are told that a $1000 n-year bond with semi-annual coupons at j₂ = 8%,redeemable at par,will be sold for $700 to an investor who wishes to yield j₂ = 12%.If the coupon rate was changed to j₂ = 11%,what price would this investor pay for the bond? (Answer to the nearest dollar)

A)$760
B)$775
C)$925
D)$1075

Question 5

A bond with $40 coupons every 6 months is purchased at a discount to yield j₂ = 8%.If the absolute value of the write-up for the first year is $10,what is the purchase price of the bond?

A)$750
B)$1250
C)$1500
D)$2500

Question 6

A bond,paying semi-annual coupons of $60,is purchased at a discount to yield j₂ = 13%.The book value adjustment in the 6^th coupon period is -$10.80.What is the interest on the book value for the 11^th coupon,I₁₁?

A)$45.20
B)$52.12
C)$67.88
D)$74.80

Question 7

For each of the following 3 bonds: yield rate is the same,face value is $1000,each bond is redeemable at par and each bond is sold at a premium (P > C).
I.A 10 year bond with annual coupons at 8%,sells for P_I
II.A 10 year bond with annual coupons at 6%,sells for P_II
III.A 20 year bond with annual coupons at 6%,sells for P_III
Which of the following statements regarding the prices of these bonds is true?

A)P_II > P_I,P_III > P_I
B)P_I > P_II,P_II > P_III
C)P_II > P_I,P_II > P_III
D)P_I > P_II,P_III > P_II

Question 8

A $2000 bond is redeemable at 105 in 6 years.It pays semi-annual coupons at j₂ = 10% and is bought to also yield j₂ = 10%.This bond sells at

A)a premium of $55.68
B)a discount of $55.68
C)a premium of $44.32
D)a discount of $44.32

Question 9

A $1000 bond,paying semi-annual coupons at j₂ = 7%,is redeemable in 5 years.It is purchased for $966.20 to yield j₂ = 8%.What is the bond redeemable at? (Answer to the nearest whole number. )

A)101
B)100
C)96
D)95

Question 10

A $20,000 bond is purchased that matures in 10 years.The bond is redeemable at par.This bond has coupons payable quarterly and the quarterly coupon amount is $400.What is the current market value of the bond if 10 year bonds are being priced today to yield j₂ = 6%? (Answer to the nearest dollar)

A)$17,025
B)$20,000
C)$21,040
D)$23,064

Question 11

A $100 bond with semi-annual coupons,redeemable at 105 in 8 years,can be purchased at a discount of $18.19 to yield j₂ = 12%.What is the bond coupon rate,j₂?

A)8.0%
B)9.0%
C)15.2%
D)16.2%

Question 12

A $1000 bond is redeemable at 104.5.The bond is bought such that yield rate > bond rate.The absolute value of the sum of the book value adjustment column is $38.75.What is the price of the bond?

A)$961.25
B)$1006.25
C)$1038.75
D)$1083.75

Question 13

A 20-year $10,000 bond is redeemable at par and pays interest at j₂ = 8% and is purchased to yield j₂ = 6%.After 8 years,the bond is sold to an investor who desires a yield of j₂ = 7%.What price does this investor pay for the bond?

A)$12,311.48
B)$11,693.55
C)$11,067.75
D)$10,802.92

Question 14

For each of the following 3 bonds,the yield rate is the same.The face value is $1000 in each case.
I.Redeemable at par in 10 years,annual coupons at 8%,sells at a premium.
II.Redeemable at par in 10 years,annual coupons at 6%,sells at a premium.
III.Redeemable at par in 20 years,annual coupons at 6%,sells at a premium.
Which of the following statements regarding the prices of these bonds is true?

A)II > I,III > II
B)I > II,III > II
C)I > II,II > III
D)II > I,II > III

Question 15

For each of the following 3 bonds,the yield rate is the same.The face value is $1000 in each case.
I.Redeemable at par in 10 years,annual coupons at 8%,sells at a discount.
II.Redeemable at par in 10 years,annual coupons at 6%,sells at a discount.
III.Redeemable at par in 20 years,annual coupons at 6%,sells at a discount.
Which of the following statements regarding the prices of these bonds is true?

A)I > II,II > III
B)I > II,III > II
C)II > I,II > III
D)II > I,III > II

Question 16

A $1000 par value 10-year bond with coupons at j₂ = x%,is redeemable at 105.The price of this bond to yield j₂ =10% is $919.15.Determine x.

A)4.96%
B)8.40%
C)8.80%
D)9.92%

Question 17

A $1000 bond with semi-annual coupons is redeemable for $1030 in 5 years.The write-down (book value adjustment)in the 1^st coupon period is $4.09.What is the price of the bond to yield j₂ = 9%?

A)$949.74
B)$979.74
C)$1050.26
D)$1080.26

Question 18

A $1000 bond with coupons at j₂ = 8% is purchased to yield j₂ = 7%.The write down in the first period after purchase is $4.01.What is the purchase price of the bond?

A)$899.75
B)$1028.29
C)$1100.25
D)$1257.43

Question 19

A bond paying semi-annual coupons and maturing in 3 years has a price of $765.31 if the yield rate is j₂ = 15%.The write-up in the book value in the last period is $46.51.What is the coupon paid each period,Fr?

A)$25.00
B)$27.26
C)$87.54
D)$89.80

Question 20

A $10,000 bond is redeemable at par in 5 years.When the yield rate is j₂ = 12%,the purchase price is $8527.98.What is the coupon rate,j₂?

A)4.0%
B)5.0%
C)6.6%
D)8.0%

Question 21

A $1000 bond is purchased at a price to yield 6.5% compounded annually.The bond has 13% annual coupons.You are given that the interest portion of the second coupon is $93.38.What is the price of the bond? (Answer to the nearest dollar)

A)$1410
B)$1471
C)$1500
D)$1837

Question 22

A $1000 bond with semi-annual coupons is redeemable for $1040.The absolute value of the sum of the write down column (book value adjustment column)is $69.30.What is the price of the bond?

A)$1109.30
B)$1069.30
C)$970.70
D)$930.70

Question 23

A $1000 par-value 10-year bond with semi-annual coupons is purchased to yield j₂ = 8%.The absolute value of the write-up (book value adjustment)for the first year is $5.What is the purchase price of the bond?

A)$851.11
B)$932.05
C)$1067.95
D)$1148.89

Question 24

A $1000 bond with semi-annual coupons at j₂ = 8% maturing at par in 10 years is callable at the end of 5 years at 102.What is the maximum purchase price an investor would be willing to pay in order to yield at least j₂ = 7%?

A)$1041.58
B)$1055.76
C)$1061.58
D)$1071.06

Question 25

A 20 year bond with semi-annual coupons at j₂ = 7% is bought at a premium to yield j₂ = 6% If the book value adjustment portion of the coupon paid at the end of 2 years is $30,what is the book value adjustment portion of the coupon paid at the end of 8 years?

A)$35.82
B)$42.77
C)$44.06
D)$45.33

Question 26

For a $10,000 bond with semi-annual coupons,you are given the following:
• The redemption value is $10,400
• The book value one period before the redemption date is $10,347.57
• Interest on the book value in the last coupon period is $369.93
What is the bond coupon rate,j₂?

A)6.35%
B)7.15%
C)7.40%
D)8.45%

Question 27

A $25,000 par value bond pays semi-annual coupons at j₂ = 7%.The book value of the bond after 14 coupons to yield j₂ = 8% is $23,679.50.What is the book value after the next coupon (after the 15^th coupon)?

A)$23,751.68
B)$23,725.71
C)$23,633.29
D)$23,607.32

Question 28

A $100 bond paying coupons at j₂ = 8% is redeemable at par in 15 years,and callable at 110 from years 5 to 10.What is the maximum purchase price an investor would be willing to pay which would guarantee a yield of j₂ = 9%?

A)$91.86
B)$97.64
C)$101.86
D)$ 102.48

Question 29

A bond is purchased at a premium and the price is calculated assuming a yield of j₂ = 11%.You are given that the semi-annual coupon payment is $65 and that the book value adjustment portion of the 1^st coupon is $7.65.What is the price of the bond?

A)$1320.91
B)$1181.82
C)$1042.73
D)$1007.65

Question 30

A bond,paying semi-annual coupons of $42,is purchased at a discount to yield j₂ = 9%.The book value adjustment in the 8^th coupon period is $8.07.What is the purchase price of this bond?

A)$801.56
B)$1065.11
C)$994.07
D)$1177.38

Question 31

A $10,000 12-year bond with interest at j₂ = 9%,is redeemable at par.It is bought for $9310.07 to yield j₂ = 10%.What is the book value of the bond after 1 coupon has been paid?

A)$9279.02
B)$9294.57
C)$9325.57
D)$9341.12

Question 32

A $10,000 bond is redeemable for $10,500.The absolute value of the last two write-down values (the last two values in the Book Value Adjustment column)are P_n-1 = 64.50 and P_n = 67.08 respectively.What is the last value in the Interest on the Book Value column,I_n?

A)$422.68
B)$417.32
C)$402.68
D)$397.32

Question 33

A $1000 bond has semi-annual coupons at j₂= 10%.It is redeemable at par in n-years (n > 5).The bond is callable in 5 years at par.The price of the bond to yield j₂ = 8%,assuming the bond is held to maturity,is $1172.92.Which of the following is the correct answer?

A)Investor would not be willing to pay $1172.92 because if the bond is called in 5 years,they will earn less than j₂ = 8%.
B)Investor would not be willing to pay $1172.92 because if the bond is held to maturity,they will earn less than j₂ = 8%.
C)Investor would be willing to pay $1172.92 because if the bond is called in 5 years,they will earn exactly j₂ = 8%.
D)Investor would be willing to pay $1172.92 because if the bond is called in 5 years,they will earn more than j₂ = 8%.

Question 34

A $1000 bond with semi-annual coupons is redeemable at 96 in 6 years.The write-down (book value adjustment)in the first coupon period is $1.79.What is the price of the bond to yield j₂ = 10%?

A)$971.51
B)$1028.51
C)$931.51
D)$988.49

Question 35

A bond,paying semi-annual coupons of $60 is purchased to yield j₂ = 13%.The absolute value of the write up (book value adjustment)in the 6^th coupon period is $5.81.What is the interest on the book value for the 11^th coupon,I₁₁?

A)$67.96
B)$64.24
C)$55.76
D)$52.04

Question 36

A 3-year bond pays level semi-annual coupons and is bought to yield j₂ = 15%.The interest portion of the first coupon is $57.40.The amount of the write-up in the book value of the bond at the time of the last coupon payment is $46.51.What is the coupon paid each period?

A)$25.00
B)$27.26
C)$87.54
D)$89.80

Question 37

A $1000 bond is redeemable at par in 10 years and is callable at par after 7 years.The price of the bond to yield j₂ = 10% is
• $982.37 assuming the bond is held to maturity
• $975.48 assuming the bond is called after 7 years
Which of the following statements is true?

A)If an investor pays $975.48 and the bond is held to maturity,the yield will equal j₂ = 10%
B)If an investor pays $975.48 and the bond is called immediately after 7 years,the yield will exceed j₂ = 10%
C)If an investor pays $982.37 and the bond is called after 7 years,the yield will exceed j₂ = 10%
D)If an investor pays $982.37 and the bond is held to maturity,the yield will equal j₂ = 10%

Question 38

A $1000 bond with semi-annual coupons at j₂ = 8% is redeemable at 99 in 10 years.It is callable at 105 in 5 years.Determine the highest purchase price to guarantee a yield of at least j₂ = 7%.

A)$1086.42
B)$1077.03
C)$1071.06
D)$1066.04

Question 39

A $1000 bond is redeemable at par in 20 years.The bond is callable at the end of 10 years at 1100.The price of the bond to yield j₂ = 5% is
• $1125.51 assuming the bond is held to maturity
• $1138.97 assuming the bond is called at 10 years
Which of the following statements is true?
(I)If you pay $1125.51 and bond is called after 10 years,the yield will exceed j₂ = 5%
(II)If you pay $1138.97 and bond is called after 10 years,the yield will be less than j₂ = 5%

A)Neither (I)or (II)
B)Both (I)and (II)
C)(I)only
D)(II)only

Question 40

A $2000 bond is redeemable at 102 in 6 years.The absolute value of the sum of the write downs (book value adjustment column)is $53.42.What is the price of the bond?

A)$2093.42
B)$2053.42
C)$1986.58
D)$1946.58

Question 41

A $500 bond was issued on May 1,2008.It pays quarterly coupons at j₄ = 8% and is redeemable at par on May 1,2023.It was purchased for $X on July 16,2010 to yield j₄ = 12%.What is $X?

A)$369.17
B)$370.56
C)$373.74
D)$378.32

Question 42

A $1500 bond was purchased between bond coupon dates for a purchase price (full or dirty price)of $1457.98.The accrued interest on the date of sale was $71.80.What price is the bond quoted at per $100 (q)on the date of sale?

A)92.41
B)101.99
C)138.62
D)152.98

Question 43

The market (or clean)price of a bond on June 15,2010 is 102.75.The accrued interest on this date is $10.27.If an investor wishes to purchase $1200 worth of this bond,what is the full (or dirty)price?

A)$1017.23
B)$1037.77
C)$1222.73
D)$1243.27

Question 44

A $10,000 bond matures on January 1,2020.It pays semi-annual coupons.It is purchased on February 1,2010 to yield j₂ = 11%.The full (or dirty)price of the bond on February 1,2010 is $9578.38.What would be the price of the bond on the coupon date,January 1,2010?

A)$9489.00
B)$9490.95
C)$9666.18
D)$9668.81

Question 45

A $1000 bond pays coupons at j₂ = 8% on April 14 and October 14 of every year.You buy the bond on July 31,2010.You are told that the price of the bond on the most recent coupon date (April 14,2010)is $1218.93 and the price of the bond on the next coupon date (October 14,2010)is $1207.69.What is the market (or clean)price,Q,of the bond on July 31,2010?

A)$1247.47
B)$1223.86
C)$1212.30
D)Cannot be determined

Question 46

An $8000 bond pays semi-annual coupons of $380 every April 15 and October 15.The bond is bought on August 15 for a full price of $8214.79.What is the quoted price per $100,q?

A)105.85
B)99.52
C)84.68
D)79.61

Question 47

A $10,000 bond pays coupons at j₂ = 10% every January 1 (day 1)and July 1 (day 182).It is purchased on March 15,2010 (day 74)to yield j₂ = 11%.The full (or dirty)price of the bond on March 15,2010 is $9578.38.What would be the price of the bond on the coupon date,January 1,2010?

A)$9370.52
B)$9372.12
C)$9373.76
D)$9787.46

Question 48

A $10,000 bond with semi-annual coupons at j₂ = 9% maturing at par on Sept 30,2016 has a price on March 30,2010 of $9,088.29 at a yield rate of j₂ = 11%.Using the method most commonly used in practice,what is the total purchase price (full or dirty price)on July 21,2010 at the same yield rate of j₂ = 11%?

A)$9118.91
B)$9339.45
C)$9392.09
D)$9395.27

Question 49

A $2000 bond pays semi-annual coupons of $70 every April 1 (day 91)and October 1 (day 274).It is redeemable for $2080.It is purchased on February 26,2010 (day 57)for a quoted price q = 103.252.What is the full (or dirty)price of the bond?

A)$2008.12
B)$2051.96
C)$2078.12
D)$2121.96

Question 50

A $900 bond,redeemable for $950,is bought on July 23,2010 at a market quotation of q = 101.35.The accrued interest is $29.58.What is the full price of the bond?

A)$1043.08
B)$979.58
C)$941.73
D)$929.58

Question 51

A $2,000 bond was purchased between bond coupon dates for a purchase price (full price)of $2500.29.The accrued interest on the date of sale was $53.70.What is the market quote per $100 (q)on the date of sale?

A)122.33
B)127.70
C)244.66
D)255.40

Question 52

A $10,000 bond pays semi-annual coupons at j₂ = 7% every March 2 and September 2.The bond is redeemable at par and is purchased between coupon dates on May 15,2010 to yield j₂ = 6.5%.At the time of purchase there are 10 coupons remaining to be paid,plus the redemption value.What is the full (or dirty)price of the bond on May 15,2010?

A)$10,352.81
B)$10,342.74
C)$10,210.56
D)$10,201.98

Question 53

A $10,000 bond pays semi-annual coupons at j₂ = 10% every January 5 and July 5.It is purchased on February 5,2010 to yield j₂ = 11%.The full (or dirty)price of the bond on February 5,2010 is $9578.38.Using the method that is most commonly used in practice,what would be the price of the bond on the coupon date,January 5,2010?

A)$9488.99
B)$9490.95
C)$9493.29
D)$9498.67

Question 54

A $2200 bond pays quarterly coupons of $44 and is redeemable at 107 on March 15,2018.It is quoted for sale at 106.8476 on May 2,2010.What price does the bond actually sell for on May 2,2010?

A)$2327.69
B)$2350.65
C)$2362.13
D)$2373.60

Question 55

A $1000 bond paying semi-annual coupons of $35 is redeemable at par on October 30,2014.It was purchased on June 23,2010 at a price that yields j₂ = 8%.Determine the clean (or market)price,Q.The day counts for April 30,June 23,and October 30 are day are 120,174,and 303 respectively.

A)$984.36
B)$974.03
C)$967.26
D)$963.70

Question 56

A $5000 bond pays semi-annual coupons of $150 every April 30^th and October 30^th.The redemption value is $5075.It is purchased on July 5,2010 at a market (clean)price $5125.What is the full (or dirty)price?

A)$5054.10
B)$5070.90
C)$5129.10
D)$5179.10

Question 57

A $1000 bond paying coupons at j₂ = 11% is redeemable at par on November 29,2013.When it is purchased on October 5,2010,the quoted price is Q = $ 1141.59 to yield j₂ = 6%.What is the full (or dirty)price on October 5,2010?

A)$1103.03
B)$1125.15
C)$1158.03
D)$1180.15

Question 58

The ABC Corporation issues a 20-year $1000 par value bond with bond interest at j₂ = 6%.The bond is callable as early as the end of 10 year at $1100.The price of the bond to yield j₂ = 5% is
• $1125.51 assuming the bond is held to maturity.
• $1138.97 assuming the bond is called at the end of 10 years.
In which of the following situations would the actual yield rate more than 5%?
(i)An investor pays $1138.97 for the bond and it is held to maturity;
(ii)An investor pays $1125.51 for the bond and it is called at the end of 15 years.

A)(i)only
B)(ii)only
C)Both (i)and (ii)
D)Neither (i)or (ii)

Question 59

A $1000 bond with a redemption date of February 1,2024 is purchased on October 7,2010.The quoted price,q,is 104.25.The bond is redeemable at par and pays interest at j₂ = 11%.What is the purchase price (full or dirty price)of the bond?

A)$1022.47
B)$1042.50
C)$1060.83
D)$1062.53

Question 60

A $1000 bond pays semi-annual coupons of $50 every April 1^st and October 1^st.The bond is purchased on February 26,2011.The price on October 1,2010 to yield j₂ = 9% is $1056.17.What is the market (or clean)price on February 26,2011?

A)$1044.82
B)$1054.00
C)$1094.66
D)$1135.48

Question 61

A $1000 bond with semi-annual coupons at j₂ = 6% (Feb.1 and Aug.1 of every year)is sold for $980 on August 1,2007.It is bought for $920 on February 1,2000.Using the method of averages,what is the yield rate,j₂?

A)5.47%
B)5.53%
C)7.11%
D)7.16%

Question 62

A $1000 bond pays semi-annual coupons of $60 every April 16 and October 16.The bond is bought for $1080 on October 17,2007 and is sold for $1050 on April 16,2012.Using the method of averages,what is the yield rate,j₂,earned over the period?

A)10.64%
B)10.70%
C)11.83%
D)11.70%

Question 63

Mr.A purchases a $10,000 bond with semi-annual coupons at j₂ = 8%,maturing at par in 5 years for $10,415.83.Mr.A immediately sells the bond coupons and the remaining strip bond.He sells the coupons for $3500.83.After he has sold both pieces,he has made a total profit of $525.94.At what yield rate,j₂,did he sell the strip bond at?

A)6.00%
B)6.09%
C)7.52%
D)9.16%

Question 64

A $1000 bond with semi-annual coupons at j₂ = 7% maturing at par on June 1,2015 was purchased on June 1,2003 at 97 and sold on June 1,2010 at 105.Find the yield rate,j₂,earned using the method of averages.

A)4.26%
B)7.72%
C)8.51%
D)8.60%

Question 65

An investor purchased a $60,000 bond with coupons payable at j₂ = 6% on March 1,2010 (first coupon was due on September 1,2010)for $55,200.He then sold this bond $58,200 on March 1,2015.Using the method of averages,what is the investor's yield rate,j₂?

A)5.34%
B)7.52%
C)7.41%
D)7.67%

Question 66

A $1200 bond with semi-annual coupons at j₂ = 6% is bought on February 2,2006 (first coupon due on August 2,2006)for $1104 and it is sold on August 2,2010 for $1164.Using the method of averages,what is the yield rate,j₂?

A)5.03%
B)5.17%
C)7.52%
D)7.67%

Question 67

A $1000 bond,with semi-annual coupons of $35,matures at par on June 1,2015.It was purchased on June 1,2005 at 105 and sold on June 1,2010 at 97.What yield rate,j₂,is earned using the method of averages?

A)5.35%
B)5.49%
C)8.37%
D)8.51%

Question 68

A $1000 bond pays semi-annual coupons of $30 every March 1 and September 1.It sells for $1043.76 on March 1,2015 to yield j₂ = 5%.If the bond is sold on June 18,2015,what is the market (clean)price.Q,of the bond on that day?

A)$1076.91
B)$1061.53
C)$1059.14
D)$1041.37

Question 69

A $20,000 bond is redeemable at 105 in 15 years and pays bond interest at j₂ = 12%.The purchase price is $22,200 based on a yield rate of j₂ = x%.Determine × using the method of averages.

A)5.34%
B)10.68%
C)10.74%
D)11.48%

Question 70

A $1000 bond with semi-annual coupons at j₂ = 12% matures on April 16,2010 at 105.If the price on April 16,2005 was $1080,what is the yield j₂ by the method of averages?

A)11.83%
B)10.70%
C)5.92%
D)5.35%

Question 71

A bond dealer buys $1,000,000 of a new issue of Government of Canada 10 year bonds (paying semi-annual coupons)for $1,000,000.The coupons are stripped and sold immediately for $483,517.93.If the remaining strip bond is redeemed at par in 10 years,what yield rate j₂ does the dealer earn?

A)6.00%
B)6.72%
C)6.83%
D)7.40%

Question 72

John buys a $2000 bond that is redeemable at 102 in 5 years.It pays semi-annual coupons at j₂ = 4%.John pays $1970.20 for the bond.Using the method of averages,what is the yield rate j₂?

A)3.29%
B)3.73%
C)4.33%
D)4.69%

Question 73

An XYZ Corporation $2000 bond,paying bond interest at j₂= 8%,matures at par on September 1,2023.What did a buyer pay for this bond on July 20,2015,if the market quotation was 104.75?

A)$2156.30
B)$2075.99
C)$2033.70
D)$2114.01

Question 74

Which of the following statements is true about an inverted yield curve?

A)Long term interest rates are less than short term interest rates and the market is expecting future interest rates to rise
B)Long term interest rates are less than short term interest rates and the market is expecting future interest rates to fall
C)Long term interest rates are greater than short term interest rates and the market is expecting future interest rates to rise
D)Long term interest rates are greater than short term interest rates and the market is expecting future interest rates to fall

Question 75

A 6-year accumulation bond with face value $10,000 and redemption value $10,150,reinvests the semi-annual coupons in the bond and pays the accumulated value of them out upon redemption,along with the redemption value.The bond pays interest at j₂ = 4%.What is the price to yield j₂ = 5%?

A)$7735.69
B)$9430.09
C)$9541.62
D)$9598.65

Question 76

A $5000 bond with interest at j₂ = 10% is redeemable at 98 in 10 years.It is purchased at a pricing yield rate of j₂ = x% and the resultant price is $5080.Using the method of averages,determine x

A)10.38%
B)9.66%
C)5.19%
D)4.83%

Question 77

An investor is interested in purchasing a $60,000 bond that is quoted at q = 102.75.You are given the accrued interest is $513.50.What is the full (dirty)price of this bond?

A)$62,163.50
B)$60,513.50
C)$61,136.50
D)$59,486.50

Question 78

A $1200 bond with semi-annual coupons at j₂ = 6% is sold at q = 97 on August 2,2010.It is bought at q = 85 on February 2,2003,with the first coupon due August 2,2003.Using the method of averages,what is the yield rate,j₂?

A)8.35%
B)8.48%
C)9.67%
D)9.80%

Question 79

Jim buys an 8 year $10,000 bond paying interest at j₂ = 6%.The bond is redeemable at 98.5.Jim strips off the coupons and sells the strip bond to Kim,who desires a yield of j₁₂ = 6%.What price does Kim pay for the bond?

A)$6231.67
B)$6195.24
C)$6138.19
D)$6102.31

Question 80

A $1000 bond pays semi-annual coupons of $60.The bond is bought for $1080 on October 16,2010 (no coupon is paid that day)and is sold for $1050 on April 16,2015 (just after the coupon is paid that day).Using the method of averages,what is the yield rate,j₂,earned over the period?

A)10.64%
B)10.70%
C)11.83%
D)11.70%